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The setting of Knights Contract is in a fictional Europe during the Middle Ages, with dark fantasy characteristics, involving witchcraft, sorcery, and otherworldly monsters. A superstitious hatred for witches is the norm for society. As a result, people employ witch-hunters and witch-executioners. The game follows Heinrich Hofmann, an experienced witch-executioner plagued by a curse, and a young woman named Gretchen, who is the reincarnation of a witch Heinrich executed under the orders of Dr. Faust. In what initially seems an act of revenge for her execution, Gretchen curses Heinrich with immortality.

At the same time, Dr. Faust, the game's main antagonist, creates hordes of monsters that terrorize the world. The mad scientist is responsible for the deaths of Gretchen and her fellow witches. Gretchen, intending to protect humanity, decides to confront the menace directly, by joining forces with the cursed executioner, Heinrich. The now-immortal Heinrich is forced to protect the mortal Gretchen from danger, in hopes of undoing the curse and defeating Dr. Faust.

The title was first announced in the May 20 issue of Weekly Famitsu Magazine.[2] A trailer for the game was shown at E3 2010. Knights Contract was the last game developed by Game Republic before the studio shut down.

GameSpot gave the game a 6.5, praising the story and art direction, while criticizing the quick-time events. IGN's closing comments were: "Knights Contract is a miserable game that I hope you do not have the misfortune to play. It completely blows up a cool premise with maddeningly stupid AI (a death sentence in a game that’s a glorified escort mission), a terrible camera that enables its unfair (and un-fun) instant kills, and a boss battle formula that should have never made past the first month of development. If you manage to run the gauntlet, and make it to the end of Knights Contract, you will have undoubtedly let loose a string of paint-peeling curse words not only at the screen, but also at your wallet, which is now sixty bucks lighter with nothing remotely fun to show for it."[citation needed]